XRP recovers after $3M short squeeze – Will it last?

• XRP was seeing selling in the perpetual market as futures traders dialed back on risk.
• Has trading shifted from speculation to fundamentals?

Instead of waiting for the ‘unexpected’ to erode their gains, investors are in high-alert mode. Yet, the buying pressure on Ripple’s [XRP] spot market remains high, signaling that the current caution could indeed be a “dip buying” opportunity.

However, the futures traders tend to disagree, taking advantage of the current caution to short-sell XRP. Which side will dominate once the de-risking settles?

Sellers or buyers?

In just ten days, $1.7 billion in futures positions have been closed. XRP’s Estimated Leverage Ratio (ELR) has been sinking to new lows since its $3.20 peak, with traders dialing back leverage.

De-risking is clearly in full swing. With inflation rising 0.2% month-to-month, uncertainty is taking over, and investors are pulling back on risk to shield their portfolios from another potential Fed shock.

This selling in the futures market matches XRP’s current holding pattern. Whale accumulation is keeping a deeper dip at bay, but volatility is rising, with sell orders dominating in perpetual trades.

However, in the last 12 hours, two large liquidity pools on Binance with over $3 million in leverage were liquidated, triggering a short squeeze. This pushed XRP back into the green.

Source: Coinglass

The key question is: Can this rally hold? To sustain momentum, a supply-demand imbalance must be created.

While futures traders show hesitation, the next crucial move is whether the spot exchange can absorb the liquidity.

XRP:  Fundamentals over speculation?

The XRP/USDT pair on Binance is seeing a surge in buy orders, fueling a three-day recovery for the altcoin, with a modest 1% gain in a single day.

Traders seem to see the current de-risking as a “dip” buying opportunity. However, despite this, the volume of buy orders has dropped significantly – halving from $600 million just three days ago.

Source: Binance

This buying pressure is absorbing the liquidity surge from the perpetual market, but if the volume doesn’t pick up soon, sellers could take control.

Is your portfolio green? Check the XRP Profit Calculator

With futures traders scaling back on leverage, XRP’s price is less vulnerable to sudden swings or a long squeeze. Now, all eyes are on the fundamentals to keep volatility in check.